Ten Pensacola residents are circulating petitions, which would allow voters to decide if $5 million in tax money should go to the ST Engineering expansion project.
At issue, an interlocal vote by the Pensacola City Council and Escambia County Commission approving the award.
The group Citizens against Corporate Welfare hopes to collect at least 4,055 signatures within a 60-day period to force a referendum. That’s 10 percent of Pensacola’s registered voters as required by the city charter.
“The city charter does prohibit challenging certain measures; one of which is a budgetary action,” said Citizens co-founder Derek Cosson. “For example, you couldn’t challenge the annual budget or a supplemental budget resolution. This is not that.”
The City Council voted earlier this month to amend the annual budget to commit the $5 million from the Local Option Sales Tax for the project, whose overall price tag is $210 million. When completed, the expansion is projected to create more than 1,300 jobs.
Cosson says the award amounts to a “raid” on the LOST fund.
“A slim majority of our City Council voted to take $5 million out of our Local Option Sales Tax money, which is really meant for infrastructure projects,” Cosson said. “We have some pretty critical needs on the infrastructure front.”
“I have no problem with [the petition], that’s why we have the process and if they get their signatures and we have a referendum, that’s something we can see and will affect change,” said City Council President Andy Terhaar, who adds that LOST proceeds are indeed earmarked for economic development.
“When the vote came to extend the LOST for another 10 years, part of the language that was stated was to use it for capital improvements – sidewalks, infrastructure – and economic development,” Terhaar says. “We feel that it’s very appropriate to use it to try and secure some jobs for the community.”
The petitioners quote an analysis provided by the council’s budget consultant prior to the LOST vote, which cited “significant financial risk for the city.”
“I think one of the big things that people don’t understand about this particular project — is that they’re saying that we're giving this money to this company, which is completely false. We’re not giving any money to ST Aerospace; what we’re doing is we’re giving money to build a building that we will then rent to ST Aerospace.”
An analysis of state business incentives by the Reason Foundation of Florida last year found that incentives programs had underperformed and should be eliminated. Another study provided by the City Council’s own budget consultant prior to the LOST vote cited “significant financial risk for the city.”
But City Council President Andy Terhaar says there’s a lot of grey area surrounding such a complex issue, and people may not have all the facts.
“One of the big things that people don’t understand about this particular project, they’re saying we’re giving this money to this company, which is completely false,” said Terhaar. “We’re not giving any money to ST Aerospace. What we’re doing is giving money to build a building that we will then rent to ST Aerospace.”
Providing a privately-owned firm taxpayer money, contends Citizens’ Derek Cosson, smacks of corporate welfare – which he says can have its pitfalls.
“We’ll own those additional hangars and lease them back to ST [Aerospace],” said Cosson. “So if something goes wrong; if ST decides to skip town or the economy collapses, we’ve essentially got hundreds of millions of dollars’ worth of hangars that we really have nothing to reuse them for.”
Meanwhile, as the petitions are circulated and signed, Terhaar says their part of the project with the $5 million in LOST monies is moving forward.
“If the petition drive is successful – I don’t know for sure the mechanisms involved,” said Terhaar. “But if it were to happen then we can’t use this money because this referendum said we couldn’t. Then we would have to go and find that $5 million somewhere else. The project is still moving forward; design is starting, breaking ground and starting construction.”
If the 4,000-and change signature threshold is met by Citizens against Corporate Welfare, the city council must revisit the issue within 45 days. If it doesn’t reverse course, then a citywide referendum would kick in.